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Business Markets and Business Buyer Behavior
Chapter 6
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Last Week
Consumer BehaviorWhat is it? Why is it important?
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Learning Goals
1. Define the business market and how it differs from consumer markets
2. Identify the major factors that influence business buyer behavior
3. List and define the steps in the business buying decision process
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Why Bother?
A business market comprises all the organizations that buy goods and services for use in the production of other products and services that are sold, rented, or supplied to others.
The business market is huge, growing globally and involves many dollars and goods.
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Case StudyUPS
Customer Needs
Consumers need fast, friendly, low-cost package delivery
Business needs are more complex Shipping part of complex
logistics process including purchasing, inventory, order status, invoices, payments, returns
Services
360,000 people and 88,000 vehicles offer ground, air, freight worldwide
Helps customer navigate the complexities of international shipping
Offers a wide range of financial services
Provides consulting services to improve logistics operations
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These UPS ads target businesses as a supply chain solution
6 - 6
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Learning Goals
1. Define the business market and how it differs from consumer markets
2. Identify the major factors that influence business buyer behavior
3. List and define the steps in the business buying decision process
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Definition
Business Buyer Behavior:The buying behavior of organizations that buy
goods and services for use in the production of other products and services that are sold, rented, or supplied to others.
Also included are retailing and wholesaling firms that acquire goods for the purpose of reselling or renting them or others at a profit.
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Characteristics of Business Markets
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Business Markets
Compared to consumer markets: Business markets
have fewer but larger customers
Business customers are more geographically
concentrated Demand is different
Demand is derived Demand is price inelastic Demand fluctuates more
Characteristics
Marketing Structure and Demand
Nature of the Buying Unit
Types of Decisions and the Decision Process
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Contain fewer, but larger buyers
Contain fewer, but larger buyers
Customers are more geographically concentrated
Customers are more geographically concentrated
Buyer demand is derived from final consumer demand
Buyer demand is derived from final consumer demand
Demand is often more inelastic
Demand often fluctuates more, and more quickly
Characteristics of Business Markets
Marketing Structure and Demand
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Business Markets
Marketing Structure and Demand
Nature of the Buying Unit
Types of Decisions and the Decision Process
Compared to consumer purchases: Involve more buyers in
the decision process More professional
purchasing effort
Characteristics
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Business buying
involves a more
professional purchasing
effort
Characteristics of Business Markets
Business buying
involves more buyers (participants)
Nature of the Buying Unit
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Business Markets
Marketing Structure and Demand
Nature of the Buying Unit
Types of Decisions and the Decision Process
Compared to consumer purchases
More complex buying decisions
The buying process is more formalized
Buyers and sellers work more closely together and build long-term relationships
Characteristics
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Business buyers
usually face more
complex buying
decisions.
Characteristics of Business Markets
Business buying
process is more
formalized.
Types of Decisions and the Decision Process
In business buying,
buyers and sellers work
more closely together.
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Model of Business Buyer Behavior
The Environment
MarketingStimuli:•Product•Price•Place•Promotion
Other Stimuli:•Economic•Technological•Political•Cultural•Competitive
The Buying Organization
The buying center
Buying decision process
(Interpersonal and individual influences)
(Organizational Influences)
Buyer Responses
Product or service choice
Supplier Choice
Order Quantities
Delivery terms and times
Service terms
Payment
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Major Types of Buying Situations
Straight rebuy Reordering without modification
Modified rebuy Requires modification to prior purchase
New task First-time purchase
Business Buyer BehaviorIn
volv
ed
De
cis
ion
Ma
kin
g
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New Task BuyingNew Task Buying
Involv
ed D
eci
sion
M
aki
ng Modified RebuyModified Rebuy
Major Types of Buying Situations
Straight RebuyStraight Rebuy
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Stages of the Buying ProcessStages of the Buying Process
New Modified StraightTask Rebuy Rebuy
Problem recognition Yes Maybe NoGeneral need description Yes Maybe NoProduct specification Yes Yes YesSupplier search Yes Maybe NoProposal solicitation Yes Maybe NoSupplier selection Yes Maybe NoOrder routing specification Yes Maybe NoPerformance review Yes Yes Yes
T23
Source:Source: Adapted from Patrick J. Robinson, Charles W. Faris, and Yoram Wind, Adapted from Patrick J. Robinson, Charles W. Faris, and Yoram Wind, Industrial BuyingIndustrial Buyingand Creative Marketingand Creative Marketing (Boston: Allyn & Bacon, 1967), p.14. (Boston: Allyn & Bacon, 1967), p.14.
Stages of the buying process Buying SituationsStages of the buying process Buying Situations
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Business-to-Business CompanyDuPont Chemicals
Established in 1802 with gunpowder as its first product
In 1910 moved away from explosives with the first non-leather material, which was snatched up for upholstery and automobile parts
Today, the firm delivers science-based solutions that make real differences in people's lives around the world in areas such as food and nutrition, health care, apparel, safety and security, construction, electronics and transportation
Revenue of $27 billion
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Business-to-Business CompanyDuPont Chemicals
Examples of B2B markets and products: Heath Care - Medical fabrics to provide comfort and safety to
surgeons Automobile – airbag fibers and engineering plastics for safety Dental – filaments for toothbrushes Glass – technology to reduce glare and noise, save energy,
protect against breakage Footware – flexibility for rubber, strength of plastic Farming – pesticides Guitar manufacturers – DuPont product give the look of
vintage lacquer
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Business Buyer Behavior
Systems SellingBuying a packaged solution to a problem from
a single seller.Often a key marketing strategy for businesses
seeking to win and hold accounts.Customization ????
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Business Buyer Behavior
Buying CenterThe decision-making unit of a buying
organization Includes all individuals and units that
participate in decision making
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Participants in the Business Buying Process
Gatekeepers
Initiators
Buyers
Influencers
Deciders
Users
Approvers
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Discussion QuestionDiscussion Question
What are the advantages and disadvantages of
buying from single suppliers versus multiple
suppliers?
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Learning Goals
1. Define the business market and how it differs from consumer markets
2. Identify the major factors that influence business buyer behavior
3. List and define the steps in the business buying-decision process
4. Compare the institutional and government markets and explain how they make their buying decisions
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Major Influences on Business Buyers
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Major Influences on Business Buyers
Environmental
Organizational
Interpersonal
Individual
Economic trends Supply conditions Technological,
political and competitive changes
Culture and customs
Key Factors Key Factors
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Major Influences on Business Buyers
Environmental
Organizational
Interpersonal
Individual
Objectives Policies Procedures Organizational
structure Systems
Key Factors Key Factors
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Major Influences on Business Buyers
Environmental
Organizational
Interpersonal
Individual
Influence of members in the buying center Authority Status Empathy Persuasiveness
Key Factors Key Factors
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Major Influences on Business Buyers
Environmental
Organizational
Interpersonal
Individual
Personal characteristics of members in the buying center Age and income Education Job position Personality Risk attitudes Buying styles
Key Factors Key Factors
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Learning Goals
1. Define the business market and how it differs from consumer markets
2. Identify the major factors that influence business buyer behavior
3. List and define the steps in the business buying decision process
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Stages in the Business Buying Process
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Business Buying on the Internet
E-procurement is growing rapidly Business buyers may purchase
electronically by: Electronic data interchange links (EDI) The Internet
Online auctions and online trading exchanges (e-marketplaces) account for much of the online purchasing activity
E-procurement offers many benefits: Access to new suppliers Lower purchasing costs Quicker order processing and
delivery
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Benefits and Problems Created by Buying on the Internet Benefits:
Shave transaction costs Reduce time between
order and delivery Create more efficient
purchasing systems Forge more intimate
relationships Level the playing field
Problems: Cut purchasing jobs Erode supplier-buyer
loyalty Create potential
security disasters
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Public ReviewPublic Review Red Tape is Common
Red Tape is Common
Government MarketsGovernment Markets
NoneconomicCriteria
NoneconomicCriteria
NegotiatedContracts
NegotiatedContracts
Some BuyingOnline
Some BuyingOnline
Institutional and Government Markets
Low BudgetsLow Budgets Captive PatronsCaptive Patrons
Institutional MarketsInstitutional Markets
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Learning Goals
1. Define the business market and how it differs from consumer markets
2. Identify the major factors that influence business buyer behavior
3. List and define the steps in the business buying decision process